Journal Entries
Question 1
Following transaction were completed by Naeem Electronics
Industry during the month of July 2023:
- Direct material worth Rs.240,000 and indirect materials ofRs.30,000 were purchased. But direct material of Rs.12,000 and indirect materials of Rs.3,000 were not according to specification and returned to the supplier.
- Direct materials worth Rs.180,000 and indirect materials wothRs.20,000 were issued to factory for use in production; but direct materials of Rs.4,000 and indirect materials of Rs.1,000 were not used in production and returned by the factory to Storeroom.
- Gross wages and salaries for the month were Rs.450,000; comprising Rs. 2,40,000 direct labour, Rs.30,000 indirect labour, Rs.120,000 sales salaries and Rs.60,000 administrative salaries. After deduction provident fund of employees @ 10% of gross earnings, Rs.405,000 were paid to employees. The company also contributes an equal amount towards the provident fund.
- Actual factory overhead cost Rs.225,000, including Rs.35,000 for depreciation of plant and Rs.10,000 for expired insurance of plant, were recorded.
- Factory overhead is applied to production at the rate of 100% of direct labour cost.
- Goods costing Rs.6000,000 were completed during the month.
- Goods costing Rs.525,000 were sold for Rs.675,000. Sales of Rs.175,000 were for cash.
Required: Pass entries in general journal from to record the above transaction.
Question 2
Jawad Manufacturing Company, during the month of January 2023, completed the following transaction.
- Material purchased during January, 2023
Direct
materials --------------------------------------------------- Rs.180, 000
Indirect materials ------------------------------------------------- 20,000
- Materials issued for use in production:
Direct
materials --------------------------------------------------------- Rs.160,000
Indirect materials ------------------------------------------------------- 10,000
- Defective materials returned to suppliers:
Direct
materials --------------------------------------------------------- Rs. 8,000
Indirect materials ------------------------------------------------------- 4,000
- Unused materials returned by factory to storeroom:
Direct
materials ---------------------------------------------------------- Rs. 4,000
Indirect materials -------------------------------------------------------- 2,000
- Payroll data for the month are as follows:
Direct
labour ---------------------------------------------------------- Rs.120,000
Indirect
labour ------------------------------------------------------- 20,000
Salaries of
marketing staff ------------------------------------------ 60,000
Salaries of
administration staff ------------------------------------- 40,000
Total
--------------------------------------------------------------------- 240,000
Deduction
of provident fund @ 10% 0f gross earnings 24,000
Net amount paid 216,000
- Factory over cost incurred during the month:
Bills for
utilities------------------------------------------------------Rs. 24,000
Factory
rent -------------------------------- ------------------------- 32,000
Depreciation of plant
---------------------------------------------- 8,000
Insurance of plant expired ---------------------------------------- 4,000
- Factory overhead applied to production @ of 50 % of direct labour cost.
- Cost of finished goods produced during the month Rs.300,000.
- Finished goods costing Rs.260,000 were sold for Rs.340,000. Sales of Rs.140,000 were for cash and of Rs.200,000 were on credit.
Required: Pass entries in the general journal to record the above transaction.
Question 3
Waqas Soap Factory completed its first year of operations on
December 31, 2022. A summary of some of the transactions for the year given
below:
- Purchase for the year:
Direct
materials----------------------------------------------- Rs.500,000
Indirect
materials--------------------------------------------- 50,000
Shipping supplies-------------------------------------------- 30,000
Total 580,000
- Materials issued from storeroom:
Direct
materials------------------------------------------ Rs.480,000
Indirect materials
---------------------------------------- 40,000
Shipping supplies----------------------------------------- 20,000
Total 540,000
- Materials purchased and directly delivered to factory for use in production
Direct materials
--------------------------------------------Rs.20,000
Indirect
materials--------------------------------------- 2,000
Total 22,000
- Payroll data for the year:
Direct labour
------------------------------------------------Rs.200,000
Indirect
labour--------------------------------------------- 50,000
Salaries of marketing
personnel-------------------------- 100,000
Salaries of administrative
personnel----------------------
90,000
Total 440,000
Deduction for provident fund
-----------------------------
22,000
Net amount paid 418,000
Employer contributes an equal amount towards provident fund.
- Depreciation on assets Rs. 100,000, 70% for factory, 10% for marketing department and 20% for the administration department.
- Miscellaneous expenses of the factory Rs.131,500.
- Other expenses of head office Rs.300,000. 60% for the marketing department and 40% for the administration department.
- Factory overhead applied to production @ 150% of direct labour cost.
- Cost of finished output of the year Rs.960,000.
- All finished output except Rs.80,000 was sold for Rs.1500,000.
Required: (i)
Pass entries in general Journal to record the above transaction.
(ii) Pass entries to closely factory overhead applied account to adjust under or over-applied factory overheads to cost of goods sold.
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